State-Owned Telecom MPT Likely to Take Japanese Partner

Japan’s KDDI Corp and Sumitomo Corp are likely to partner with Burma’s state-backed telecommunications operator to expand services in one of the world’s least-connected countries.

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By Jared Ferrie 13 January 2014

RANGOON — Japan’s KDDI Corp and Sumitomo Corp are likely to partner with Burma’s state-backed telecommunications operator to expand services in one of the world’s least-connected countries, a Sumitomo official said.

Sumitomo’s deputy general manager in Burma, Soe Kyu, told Reuters the companies were jointly invited into “exclusive” talks about becoming the international partner of Myanmar Post and Telecommunication (MPT), sharing its existing license. No further details on the likely partnership were revealed.

MPT is currently the country’s sole telecoms operator as well as the industry’s regulator. The government plans to create a new regulator by 2015 and will divest a part of MPT but will retain a majority stake. That company, with a new name, will be one of four licensed operators.

State-backed Yatanarpon, primarily an Internet service provider until now, also holds a license as do Norway’s Telenor and Qatar’s Ooredoo, which won the hotly contested bidding for two new licenses in June but have not yet rolled out their networks.

Soe Kyu noted that a partnership between Sumitomo and KDDI had been shortlisted for the two international licenses awarded in June. He added that barring any unforeseen circumstances, the consortium would instead agree a partnership with MPT within a couple of months. “This time we are confident,” he said.

Telecommunications were tightly controlled under decades of military dictatorship in Burma, with the government monopolizing the sector and selling SIM cards for thousands of dollars when they were introduced a decade-and-a-half ago.

As a result, Burma had the lowest mobile penetration rate in the world, with Swedish telecoms giant Ericsson saying in 2012 that less than 4 percent of the country’s 60 million people were connected.

Since 2011, a quasi-civilian government has implemented sweeping political and economic reforms and has made telecommunications a key part of its plan to jump-start the economy.

The government has released more SIM cards into the market in recent months, although not nearly enough to satisfy demand and they still sell for about US$160. Mobile phone penetration has jumped to 9 percent, according to government figures.

Ooredoo’s Burma CEO, Ross Cormac, told Reuters on Oct. 31 his company could roll out a network and provide mobile phone and data services in Burma’s four biggest cities within six months of getting final approval. Ooredoo would reach 97 percent of the population within five years, he said.

The operators will have their work cut out for them in a country with little infrastructure in rural areas, several ethnic armed groups controlling large swathes of territory, and where land ownership is a complicated and volatile issue.

Law firm VDB Loi, which represents Ooredoo, has urged the government to simplify the process of acquiring land to build towers necessary to extend service across the country.

Cormac told Reuters that Ooredoo plans to share the building and use of infrastructure with Telenor and MPT, or one of the two. He said subcontractors would negotiate with ethnic armed groups to extend the network into territory under their control.